US Internal Revenue Service faces scrutiny over $15 billion overspend 29 years behind schedule

The Internal Revenue Service (IRS), the main US tax collection agency, has spent approximately $15 billion beyond its initial budget on an IT modernization project that remains incomplete — despite being nearly three decades behind schedule. 

This revelation comes from the US Government Efficiency Office (DOGE), an oversight agency led by billionaire Elon Musk, which published its findings on X, Caliber.Az reports, citing foreign media.

According to DOGE, US government funding for IT modernization efforts across various agencies often goes toward paying for time spent on projects rather than achieving tangible results. "This leads to a situation where contractors have an incentive to 'never finish' modernization efforts, resulting in enormous expenses," the office stated.

The IRS modernization project serves as a prime example. Originally launched in 1990, the initiative was intended to be completed by 1996. However, nearly 30 years later, the work remains unfinished, and contractors are now estimating that at least five more years will be required. "This means the project is running 29 years behind schedule, with cost overruns totalling about $15 billion. The only winners are the government contractors," DOGE emphasized, stressing that "this must change."

In response to the prolonged delays and excessive spending, the IRS recently froze approximately $1.5 billion worth of modernization contracts. According to DOGE, none of these frozen contracts affect tax filing operations. The agency plans to either cancel the contracts outright or modify them so that payments are based on results rather than time spent.

Since Donald Trump’s inauguration as US president on January 20, DOGE has undertaken a sweeping review of federal government expenditures. Musk, who oversees the agency’s work, has stated that DOGE aims to cut Washington’s federal spending by $2 trillion as part of a broader initiative to improve government efficiency and accountability.

By Tamilla Hasanova